BP Says Big Oil Is Dead: Buy This Stock Instead

BP (NYSE:BP) is one of the largest oil companies in the world. You’ll be shocked to read the conclusions of its recent report on the future of energy.

| More on:

BP (NYSE:BP) is one of the largest oil companies in the world. At the start of the year, its market cap exceeded $100 billion. Once the coronavirus pandemic began, however, the company took a big hit.

Right now, BP stock trades at half its former valuation. Oil prices are a big factor. In January, they were above US$60 per barrel. Today, they’re below US$40 per barrel.

Fossil fuel producers are hurting right now, and according to a new report, the pain won’t go away anytime soon. But fear not: this is actually a great time to look at alternatives.

Oil is dead

Oil companies aren’t incentivized to publicly announce the secular decline of their main source of income. For years, these players rejected any notion that the clock was ticking. The world would always need fossil fuels they said. That may be true, but it doesn’t mean demand won’t ever subside.

This month, BP shocked the industry by releasing its latest energy forecast report, which had some startling predictions.

In two scenarios, demand never recovers beyond pre-pandemic levels. This would mean we’ve already reached peak oil consumption. In BP’s third scenario, demand recovers once the pandemic passes, but then flatlines over the next 20 years before entering a permanent decline.

Global populations are still growing, but at a slower rate than the past. China, for example, is expected to reach its peak population by 2030. Europe and many North American countries are already starting to shrink if you exclude the effects of immigration.

“The scale and pace of this decline is driven by the increasing efficiency and electrification of road transportation,” BP’s report stated. In essence, the report concludes that our shift to renewables will permanently damper oil demand, even in the company’s bullish scenario.

This stock will win

Oil companies were a great bet over the last century. The next century will be dominated by renewable energy players. Like oil, several massive players will evolve. Now is the time to get involved.

The most obvious pick is Brookfield Renewable Partners (TSX:BEP.UN)(NYSE:BEP). It already has an early lead.

As BP mentions in its report, renewable energy will be just as big as the oil boom. Over the last five years, $1.5 trillion has been invested in renewable projects worldwide. But over the next five years, investment should total $5 trillion. Over the next decade, spending should surpass $10 trillion. Few opportunities are as big as this.

Brookfield is positioned to target this truly global opportunity as it already has assets across several continents. Its access to capital is also unparalleled.

Most importantly, Brookfield has a proven appetite for early-stage projects. These investments have higher risk, but significantly more reward. If a company wants to tap the entire opportunity, it must show a willingness to invest across the board. Brookfield has done just that.

Over the last 20 years, Brookfield stock rose by 500%. Over that period, BP stock fell by nearly 50%. The future is renewable energy, not oil. Brookfield gives you a front row seat at the table.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ryan Vanzo has no position in any stocks mentioned.

More on Energy Stocks

engineer at wind farm
Energy Stocks

Invest $20,000 in This Dividend Stock for $100 in Monthly Passive Income

This dividend stock has it all – a strong outlook, monthly income, and even more to consider buying today.

Read more »

A worker overlooks an oil refinery plant.
Energy Stocks

Is Imperial Oil Stock a Buy, Sell, or Hold for 2025?

Valued at a market cap of $55 billion, Imperial Oil pays shareholders a growing dividend yield of 2.4%. Is the…

Read more »

Pumpjack in Alberta Canada
Energy Stocks

Where Will Imperial Oil Stock Be in 1 Year?

Imperial Oil is a TSX energy stock that has delivered market-thumping returns to shareholders over the last two decades.

Read more »

Pumpjack in Alberta Canada
Energy Stocks

1 Magnificent Energy Stock Down 17% to Buy and Hold Forever

Down over 17% from all-time highs, Headwater Exploration is a TSX energy stock that offers you a tasty dividend yield…

Read more »

Pumpjack in Alberta Canada
Energy Stocks

Is Cenovus Energy Stock a Good Buy?

Cenovus Energy (TSX:CVE) stock is primed for capital gains and strong total returns in 2025, driven by strategic buybacks and…

Read more »

Trans Alaska Pipeline with Autumn Colors
Energy Stocks

2 High-Yield Dividend Stocks That are Screaming Buys Right Now

Natural gas stocks like Peyto Exploration and Development are yielding above 7% today and look undervalued as natural gas strengthens.

Read more »

chart reflected in eyeglass lenses
Energy Stocks

Best Stock to Buy Right Now: Canadian Natural Resources vs Cenovus?

Want to invest in Canadian energy? Canadian Natural Resources and Cenovus Energy are two of the largest, but which one…

Read more »

oil pump jack under night sky
Energy Stocks

Where Will Cenovus Stock Be in 1/3/5 Years? 

Let's dive into whether Cenovus (TSX:CVE) stock is worth buying right now and where this stock could be headed over…

Read more »